Where is the “Sharing” in the Sharing Economy?

In a thought-provoking essay on the realities of the sharing economy (“The Sharing Economy’s Dirty Little Secret”, Wall Street Journal 4/23/14) Twice founder Noah Ready-Campbell points out (among other things) that most of the darlings of the sharing economy are not about sharing at all. Well, he’s right! As Mr. Ready-Campbell correctly points out, sharing – free sharing that is – is not a significant part of the sharing economy. Collaborative consumption, yes. Sharing, no.

What is the motivation to share?

The primary motivator for “sharing” - let’s be serious, it is really renting or selling - is financial. The owner wants to monetize a useful but underutilized asset. The user wants to access something at a better price or with a more unique service offering. Folks have been renting out their spare apartment long before AirBNB came along. They just had to work harder to find renters. And they had to handle the details of the transaction themselves. But technology has now enabled a vast network of peer-to-peer connections. And creative entrepreneurs have built features which mitigate the risk factors and reduce friction to the point that a much larger pool of owners are comfortable entering the marketplace. To these owners the new cash flow mitigates the risk of having a stranger sleeping in your spare bedroom.

The same can be said for the car sharing and ride sharing services. And the examples continue from there. Check out some of the great work of sharing economy thought-leaders like Rachel Botsman, Lisa Gansky or Jeremiah Owyang for more on this amazing and explosive space. You will see that the primary driver for the majority of the services in the space is making money or saving money.

Is there free sharing in the sharing economy?

So, where is the free sharing? Or, does it even exist in the sharing economy? Is this all about financial gain, or is there true altruistic sharing in this space? We know that sharing in general still happens. Just like when we were kids, sharing happens within the world of friends, close neighbors and co-workers; people who we already know and trust. The problem with sharing comes when you try to scale it beyond known acquaintances. That’s where the transaction cost and risk becomes higher than the non-monetary “goodwill” return on that risk.

So what’s the answer? Just accept that literally hundreds of millions of smaller household and office items just sit idle until they finally get thrown away or forgotten? Smaller things that most of us have in our homes or offices are often not valuable enough to garner a rental fee. So they are not really rental candidates. And even though you may only use something once a year, you still want to retain ownership of that air compressor, folding table, and backyard tent. So they are not really resale candidates. Need a drill? Just go to Home Depot and buy it. So what that there are 50 other drills sitting idle in apartments within a block of your building. There’s no easy way to find those drills.

Innovative solutions emerging

There are entrepreneurs solving this issue. At Spare to Share we resolve the risk/trust issue by targeting existing closed networks. Rather than trying to create trust where it does not yet exist (in entire zip codes or neighborhoods for example), we instead leverage trust within existing groups. And we use technology to make the connection of people to stuff within common groups. Classic examples include residential buildings, commercial buildings, businesses, colleges & schools, religious groups and social clubs. Not only do consumers save money, but the overall ‘community feeling’ in the group is enhanced.

When you already know someone (friends and family) the trust is there. The technology just makes it easier to express what you have to share and what you want to borrow. When you barely know someone but have strong things in common (the building you live or work in, club you belong to, etc.) the common bond is a proxy for trust and extends the network of potential free sharers and borrowers. The result is saving money when you need things, earning goodwill when you have things, and getting to know your neighbors. As long as the method to list your items is simple (photo and barcode scan based) it is also a way to keep track of what you have.

The expansion of free sharing will be the next giant leap in the collaborative consumption space, and the segment of the space that truly earns the name ‘the sharing economy’.